The relevant market is defined as the set of goods whose
A) price elasticities of demand are low
B) cross elasticities with other goods outside the set are high
C) price elasticities of demand are high
D) income elasticities of demand are high
E) cross elasticities with other goods in the set are high

Question

Quizplus · Accepted Answer

The relevant market is defined by how substitutable goods are within that market, which is captured by high cross elasticities of demand among goods in the set. This means if the price of one good increases, consumers are likely to switch to another good within the same market, indicating they are close substitutes.

The Relevant Market Is Defined as the Set of Goods